When the sale is completed, the Tata Group will run the company. The government had invited bids for a 25% stake in VSNL, the monopoly international telephony in India. The sale is part of a plan to sell equity in a number of companies majority owned by the government.
The Indian government currently owns 52.97% of VSNL equity. Even after the sale of 25% of the equity to the Tata Group, the government will still be the largest shareholder.
However, the Tata Group plans to make an open bid for 20% of the VSNL equity not owned by the government. The acquisition of a controlling stake in VSNL will help the Tata Group broaden the services it offers, said Ratan Tata, chairman of the Tata Group.
VSNL's monopoly on overseas communications is to end by 1 April.
The Indian government decided in September 2000 to open international telephony to the private sector; reversing an earlier decision to extend VSNL's monopoly to 2004. Besides operating long-distance telephony services, VSNL is also India's largest Internet service provider with a subscriber base of 660,566 at the beginning of this year.